Employment in Belarus continues to reduce

In Q1 2017, Belarusian enterprises laid off 10 600 people more than recruited. If compared with 2016, the situation on the labour market has improved due to a change in the energy prices on the world market and an increase in demand for Belarusian produces. The state is likely to continue to deny problems on the labour market, while companies are likely to continue to lay off workers.

According to Belstat, in Q1 2017, large and medium-sized enterprises in Belarus hired 127 100 people and laid off 137 700 people. Net layoffs totalled 10600 people, including, 5000 people in March. Most layoffs were reported in industry, construction and retail trade (a total of 9900 people). In late March, there were 43 400 unemployed in Belarus or 8100 unemployed more than in December 2016.

In Q1 2016, the number of laid-off totalled 30600 people, unemployed exceeded 53500 people, and GDP fell by 3.6%, which prevented any improvements on the labour market. In 2017, the situation is more favourable due to higher oil prices and boosted demand for Belarusian products on the Russian market. Some signs of economic recovery have prompted the country’s leadership to declare that the crisis has been overcome and that in 2017 wages would reach BYN 1,000 amid full employment.

That said, amid a slight improvement in GDP dynamics in Q1 2017, the mutually contradicting tasks of USD 500 monthly wages and full employment are unlikely to be fulfilled. Even with the current employment in the economy, in order to achieve a BYN 1000 monthly wage, enterprises would have to find additional several billion US Dollars to ensure pay rises. The state regards some 350 000 people as social dependents. Their employment with a BYN 1,000 monthly wage would require additional BYN 350 million per month. Such funds are unavailable at state enterprises. Moreover, the excess labour in the economy is some 8-10%. Expected bankruptcies of unprofitable agricultural enterprises would put additional pressure on the labour market. In the given circumstances, the state is likely to offer low-paid jobs in order to demonstrate demand for additional workers, but layoffs would persist. Net employment is likely to be reported only by some industries, such as IT, medicine, and education, while net layoffs in the economy as a whole could make some 5000 to 10000 people per quarter.

Overall, despite some improvements in the economy, layoffs persist in Belarus. As it would be impossible to fulfil both tasks, eg wage growth and full employment, the state is likely to demonstrate availability of low-paid jobs amid further layoffs in the economy.